Levine said the contract expired June 30, 2011, which means the raises approved for this fiscal year will be awarded retroactively.

"It had been pending for a while," Levine said, referring to the contract. "We had stopped talking and were headed to binding arbitration, but we pulled back so we could continue the process. It took weeks and then months, but our relations with the union are cordial and we're pleased it's been settled."

According to the contract, the issue of health benefits has been left open. The union is expected to vote on whether to join the Connecticut Partnership Plan, which lets municipalities and local school boards join the health benefits plan the state offers its employees and is presented as a way of reducing costs.

If the union does not agree to join the state program by Sept. 30, the contract will be reopened and the union and city will negotiate new health benefits.